SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

January 19, 2012

 

 

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

 

 

Torshamnsgatan 23, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No  x

Announcement of LM Ericsson Telephone Company, dated January 19, 2012 regarding “Sony Ericsson reports fourth quarter and full year 2011 results”

 

 

 

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PRESS RELEASE		January 19, 2012

Sony Ericsson reports fourth quarter and full year 2011 results

 

•

Q4 loss reflects intense competition, price erosion and restructuring charges

 

•

65% year-on-year increase in Android-based XperiaTM smartphone quarterly sales

 

•

28 million Xperia smartphones shipped to date

The consolidated financial summary for Sony Ericsson Mobile Communications AB (Sony Ericsson) for the fourth quarter and full year ended December 31, 2011 is as follows*:

 

		Q4 2010				Q3 2011				Q4 2011				FY 2010				FY 2011
Number of units shipped (million)			11.2				9.5				9.0				43.1				34.4
Average selling price (Euro)			136				166				143				146				152
Sales (Euro m.)			1,528				1,586				1,288				6,294				5,212
Gross margin (%)			30	%			27	%			24	%			29	%			28	%
Operating income (Euro m.)			39				38				-227				159				-206
Operating margin (%)			3	%			2	%			-18	%			3	%			-4	%
Restructuring charges (Euro m.)			-3				—				-93				-42				-93
Operating income excl. restructuring charges (Euro m.)			43				38				-134				202				-113
Operating margin excl. restructuring charges (%)			3	%			2	%			-10	%			3	%			-2	%
Income before taxes (IBT) (Euro m.)			35				31				-247				147				-243
IBT excl. restructuring charges (Euro m.)			39				31				-154				189				-150
Net income (Euro m.)			8				0				-207				90				-247

 

*	All amounts are according to Swedish GAAP.

Bert Nordberg, President and CEO of Sony Ericsson commented: “Our fourth quarter results reflected intense competition, unfavorable macroeconomic conditions and the effects of a natural disaster in Thailand this quarter. We are aligning our business to drive profitability and to meet customer needs. In spite of these challenges, throughout 2011 we’ve shifted our business from feature phones to smartphones, and our Android-based smartphone sales in the quarter increased by 65% year-on-year. The Xperia portfolio, including the recently announced Xperia NXT series, will serve as a cornerstone of our smartphone lineup in 2012.”

Units shipped during the quarter were 9 million, a 20% decrease year-on-year and a 5% decrease compared to last quarter. The year-on-year and sequential declines reflect a significantly lower number of feature phones shipped, partially offset by an increase in smartphone shipments. Sony Ericsson has shipped 28 million Xperia smartphones to date.

Average selling price (ASP) for the quarter was Euro 143, up 5% year-on-year but down 14% sequentially. The year-on-year increase is due to the shift to smartphones and geographic mix. The sequential decrease in ASP is attributed to geographic and product mix, including declining prices of products launched earlier in the year, and the absence of new products introduced in the fourth quarter.

 

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Sales for the quarter were approximately Euro 1.3 billion, down 16% year-on-year and 19% quarter over quarter. The year-on-year decline reflects the decrease of feature phone sales which was only partially offset by an increase in smartphone sales. The sequential decline is due to geographic and product mix, resulting in lower sales of both smartphones and feature phones. Fourth quarter sales were negatively impacted by macroeconomic challenges in advanced economies contributing to weaker holiday sales, and certain component shortages from the flooding in Thailand in late October and early November 2011. Xperia smartphones accounted for approximately 80% of total sales in the fourth quarter.

The gross margin for the quarter was 24%, a decrease of 6 percentage points year-on-year and 3 percentage points from the previous quarter. The year-on-year and sequential decreases are attributed to product and geographic mix. Fourth quarter gross margin was also adversely affected by intense smartphone price competition which more than offset the benefit of royalty and other items.

Loss before taxes, excluding restructuring charges, was Euro 154 million for the quarter, compared to income of Euro 39 million for the same quarter last year and of Euro 31 million in the previous quarter. The year-on-year and sequential declines are due to lower gross margin and increased operational expenses, including higher development and selling expenses.

In December 2011, Sony Ericsson launched a restructuring program including global workforce reductions to reduce costs and drive competitiveness. Restructuring charges for the quarter are Euro 93 million and the program is estimated to be completed by the end of 2012.

The quarter ended in a net loss of Euro 207 million, compared to a net income of Euro 8 million in the same quarter of the previous year, and essentially a break even result in the previous quarter.

Cash flow from operating activities during the quarter was negative Euro 26 million. External borrowings were Euro 19 million during the quarter. Total borrowings were Euro 742 million at the end of the quarter. Total cash balances at December 31, 2011 were Euro 442 million.

Sony Ericsson estimates that its share of the global Android-based smartphone market was 10% in volume and 7% in value during the quarter and 10% in volume and 10% in value for the full year.

Sony Ericsson estimates that the global smartphone market for the full year 2011 increased by 60% in volume to 463 million units. Sony Ericsson estimates strong growth in the smartphone market in 2012.

In October 2011 Sony Corporation (“Sony”) and Telefonaktiebolaget LM Ericsson (“Ericsson”) announced that Sony will acquire Ericsson’s stake in Sony Ericsson and that Sony Ericsson will become a wholly-owned subsidiary of Sony. The transaction is expected to close in late January to February, subject to customary closing conditions, including regulatory approvals.

The liquid identity is a registered trademark of Sony Ericsson Mobile Communications AB. Xperia™ is a trademark of Sony Ericsson Mobile Communications AB. Sony is a registered trademark of Sony Corporation. Ericsson is a registered trademark of Telefonaktiebolaget LM Ericsson. Any rights not expressly granted herein are reserved and subject to change without prior notice.

EDITOR’S NOTES:

Financial statements:

Consolidated income statement

Consolidated income statement - isolated quarters

Consolidated balance sheet

Consolidated statement of cash flows

Consolidated statement of cash flows - isolated quarters

Net sales by market area by quarter

 

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About Sony Ericsson

Sony Ericsson is a 50:50 joint venture between Sony Corporation (“Sony”) and Telefonaktiebolaget LM Ericsson (“Ericsson”). In October 2011 it was announced by Sony and Ericsson that Sony will acquire Ericsson’s stake in the company and that Sony Ericsson will become a wholly-owned subsidiary of Sony. The transaction is expected to close in late January to February, subject to customary closing conditions, including regulatory approvals. Over the years Sony Ericsson has brought together the best communication technologies with superior entertainment user experiences to create its Xperia™ line of the ‘most entertaining smartphones’ in the mobile handset industry. With its global corporate functions in London, Sony Ericsson has sales and marketing operations in all major regions of the world, as well as manufacturing in China, and product development sites in China, Japan, Sweden and Silicon Valley, California. For more information, please visit: www.sonyericsson.com/press.

- ENDS -

CONTACTS:

Ericsson investor relations

Stefan Jelvin (Stockholm) +46 10 714 2039

Sony investor relations

Yoshinori Hashitani (Tokyo) +81 3 6748 2111

Yas Hasegawa (London) +44 20 7426 8696

Press / Media

Sony Ericsson global communications and PR

Cathy Davies (London) +44 208 762 5879

Holly Rossetti (London) + 44 208 762 5851

Gustaf Brusewitz (London) +44 208 762 5805

This press release contains forward-looking statements that involve inherent risks and uncertainties. Sony Ericsson has identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For a detailed description of risk factors see Sony’s and Ericsson’s filings with the US Securities and Exchange Commission, particularly each company’s latest published Annual Report on Form 20-F.

 

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT*

 

		Oct-Dec												Jan-Dec
EUR million		2010				2011				Change				2010				2011				Change
Net sales			1 528				1 288				-16	%			6 294				5 212				-17	%
Cost of sales			-1 069				-985				-8	%			-4 440				-3 735				-16	%
Gross profit			459				303				-34	%			1 853				1 477				-20	%
Gross margin %			30	%			24	%			-6pp				29	%			28	%			-1pp
Research and development expenses			-191				-268				40	%			-746				-815				9	%
Selling and administrative expenses			-236				-270				14	%			-986				-900				-9	%
Operating expenses**			-427				-538				26	%			-1 732				-1 715				-1	%
Other operating income, net			7				8				14	%			38				32				-16	%
Operating income			39				-227				-682	%			159				-206				-230	%
Operating margin %			3	%			-18	%			-21pp				3	%			-4	%			-7pp
Financial income			2				4				100	%			18				19				6	%
Financial expenses			-6				-24				300	%			-30				-56				87	%
Income before taxes			35				-247				-806	%			147				-243				-265	%
Taxes			-27				46				-267	%			-48				19				-140	%
Minority interest			0				-6				—				-9				-23				156	%
Net income			8				-207				-2688	%			90				-247				-374	%
Number of units shipped (million)			11,2				9,0				-20	%			43,1				34,4				-20	%
ASP (EUR)			136				143				5	%			146				152				4	%
EUR million		Oct-Dec												Jan-Dec
Restructuring charges		2010				2011								2010				2011
Cost of sales			2				0								-32				0
Research and development expenses			0				-55								7				-55
Selling and administrative expenses			-5				-38								-17				-38
Total			-3				-93								-42				-93

 

*	All amounts are according to Swedish GAAP

**	Operating expenses in 2010 have been restated to reflect certain organizational changes.

 

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Sony Ericsson

CONSOLIDATED INCOME STATEMENT - ISOLATED QUARTERS*

 

		2010																2011
EUR million		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4
Net sales			1 ,405				1 ,757				1 ,603				1 ,528				1, 145				1, 193				1, 586				1 ,288
Cost of sales			-975				-1,266				-1,130				-1,069				-763				-828				-1,159				-985
Gross profit			429				492				473				459				382				365				427				303
Gross margin %			31	%			28	%			30	%			30	%			33	%			31	%			27	%			24	%
Research and development expenses			-185				-191				-179				-191				-173				-184				-190				-268
Selling and administrative expenses			-238				-272				-241				-236				-199				-224				-207				-270
Operating expenses**			-423				-463				-420				-427				-372				-408				-397				-538
Other operating income, net			14				7				10				7				10				6				8				8
Operating income			20				36				63				39				19				-37				38				-227
Operating margin %			1	%			2	%			4	%			3	%			2	%			-3	%			2	%			-18	%
Financial income			7				2				7				2				3				5				7				4
Financial expenses			-9				-7				-8				-6				-8				-10				-14				-24
Income before taxes			18				31				62				35				15				-42				31				-247
Taxes			6				-16				-12				-27				-5				-3				-17				46
Minority interest			-3				-4				-2				0				1				-5				-14				-6
Net income			21				12				49				8				11				-50				0				-207
Number of units shipped (million)			10.5				11.0				10.4				11.2				8.1				7.6				9.5				9.0
ASP (EUR)			134				160				154				136				141				156				166				143
EUR million		2010																2011
Restructuring charges		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4
Cost of sales			2				-33				-3				2				—				—				—				0
Research and development expenses			-2				-1				5				0				—				—				—				-55
Selling and administrative expenses			-3				2				-6				-5				—				—				—				-38
Total			-3				-32				-4				-3				—				—				—				-93

 

*	All amounts are according to Swedish GAAP.

**	Operating expenses in 2010 have been restated to reflect certain organizational changes.

 

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Sony Ericsson

CONSOLIDATED BALANCE SHEET*

 

EUR million		Dec 31 2010				Jun 30 2011				Sep 30 2011				Dec 31 2011
ASSETS
Total fixed and financial assets			803				819				890				1,122
Current assets
Inventories			460				570				656				447
Accounts receivable			836				872				1,090				692
Other assets			295				330				408				380
Other short-term cash investments			276				329				301				270
Cash and bank			329				188				165				172
Total current assets			2,196				2, 289				2,620				1,961
Total assets			2,999				3 ,108				3,510				3,083
SHAREHOLDERS’ EQUITY AND LIABILITIES
Shareholders’ equity			532				451				507				309
Minority interest			42				43				60				58
Total equity			574				494				567				367
Borrowing, Non Current			100				0				0				0
Other long-term liabilities			32				31				40				44
Total long-term liabilities			132				31				40				44
Accounts payable			769				716				1 050				676
Borrowing, Current			130				769				718				742
Other current liabilities			1, 394				1,098				1,135				1,254
Total current liabilities			2 ,293				2,583				2,903				2,672
Total shareholders’ equity and liabilities			2, 999				3,108				3, 510				3 ,083
Net cash**			375				-252				-252				-300

 

*	All amounts are according to Swedish GAAP.

**	Net cash is defined as cash and bank deposit plus short-term cash investments less interest-bearing liabilities.

 

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS*

 

		Oct-Dec								Jan-Dec
EUR million		2010				2011				2010				2011
OPERATING
Net income			8				-207				90				-247
Adjustments to reconcile net income to cash			-50				112				-156				-27
			-42				-95				-65				-274
Changes in operating net assets			-86				69				-183				-276
Cash flow from operating activities			-128				-26				-248				-550
INVESTING
Investing activities			-18				-19				-4				-113
Cash flow from investing activities			-18				-19				-4				-113
FINANCING
Financing activities			- 178				11				- 60				496
Cash flow from financing activities			-178				11				-60				496
Net change in cash			-324				-34				-312				-167
Cash, beginning of period			921				466				878				605
Translation difference in Cash			7				10				38				4
Cash, end of period			605				442				605				442

 

*	All amounts are according to Swedish GAAP.

 

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Sony Ericsson

CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS*

 

		2010																2011
EUR million		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4
OPERATING
Net income			21				12				49				8				11				-50				0				-207
Adjustments to reconcile net income to cash			-44				4				-66				-50				-137				-29				27				112
			-23				16				-17				-42				-127				-79				27				-95
Changes in operating net assets			-72				13				-38				-86				-226				-145				26				69
Cash flow from operating activities			-94				29				-54				-128				-353				-224				53				-26
INVESTING
Investing activities			27				-15				2				-18				-14				-21				-58				-19
Cash flow from investing activities			27				-15				2				-18				-14				-21				-58				-19
FINANCING
Financing activities			150				0				- 32				- 178				375				165				- 56				11
Cash flow from financing activities			150				0				-32				-178				375				165				-56				11
Net change in cash			83				15				-85				-324				8				-80				-61				-34
Cash, beginning of period			878				980				1 039				921				605				599				516				466
Translation difference in Cash			19				45				-33				7				-14				-3				11				10
Cash, end of period			980				1, 039				921				605				599				516				466				442

 

*	All amounts are according to Swedish GAAP.

 

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Sony Ericsson

NET SALES BY MARKET AREA BY QUARTER*

 

EUR million		2010																2011
Isolated quarters		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4
Europe, Middle East & Africa **			711				876				837				795				485				435				480				571
Americas			201				223				222				205				151				193				121				199
Asia			493				659				544				528				509				565				985				518
Total			1,405				1, 757				1, 603				1, 528				1, 145				1, 193				1,586				1, 288
** of which Western Europe			525				668				632				569				307				323				313				355
		2010																2011
Sequential change (%)		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4
Europe, Middle East & Africa **			-26	%			23	%			-4	%			-5	%			-39	%			-10	%			10	%			19	%
Americas			-9	%			11	%			0	%			-8	%			-26	%			28	%			-37	%			64	%
Asia			-12	%			34	%			-17	%			-3	%			-4	%			11	%			74	%			-47	%
Total			-20	%			25	%			-9	%			-5	%			-25	%			4	%			33	%			-19	%
** of which Western Europe			-23	%			27	%			-5	%			-10	%			-46	%			5	%			-3	%			13	%
		2010																2011
Year over year change (%)		Q1				Q2				Q3				Q4				Q1				Q2				Q3				Q4
Europe, Middle East & Africa **			-27	%			-6	%			-4	%			-18	%			-32	%			-50	%			-43	%			-28	%
Americas			1	%			14	%			-4	%			-8	%			-25	%			-13	%			-45	%			-3	%
Asia			-12	%			17	%			6	%			-6	%			3	%			-14	%			81	%			-2	%
Total			-19	%			4	%			-1	%			-13	%			-19	%			-32	%			-1	%			-16	%
** of which Western Europe			-27	%			-1	%			-1	%			-16	%			-42	%			-52	%			-50	%			-38	%
		2010																2011
Year to date		1003				1006				1009				1012				1103				1106				1109				1112
Europe, Middle East & Africa **			711				1 ,587				2 ,424				3 ,219				485				919				1, 399				1,970
Americas			201				424				646				851				151				345				466				664
Asia			493				1, 152				1, 695				2, 224				509				1,075				2,060				2,577
Total			1 ,405				3 ,162				4, 765				6 ,294				1, 145				2 ,339				3 925				5, 211
** of which Western Europe			525				1,193				1 ,825				2 ,393				307				630				944				1 ,298
		2010																2011
YTD year over year change (%)		1003				1006				1009				1012				1103				1106				1109				1112
Europe, Middle East & Africa **			-27	%			-17	%			-13	%			-14	%			-32	%			-42	%			-42	%			-39	%
Americas			1	%			7	%			3	%			0	%			-25	%			-19	%			-28	%			-22	%
Asia			-12	%			3	%			4	%			1	%			3	%			-7	%			22	%			16	%
Total			-19	%			-8	%			-5	%			-7	%			-19	%			-26	%			-18	%			-17	%
** of which Western Europe			-27	%			-15	%			-10	%			-12	%			-42	%			-47	%			-48	%			-46	%

 

*	All amounts are according to Swedish GAAP.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: January 19, 2012